TotalEnergies and Petronas get stakes in Petrobras assets to expand pre-salt footprint off Brazil

French energy major TotalEnergies and Malaysian energy giant Petronas have increased their asset portfolio and production in the pre-salt Santos Basin, following successful bids on oil fields, operated by Petrobras, offshore Brazil.

Petronas acquired a 21 per cent non-operated interest in the Sépia field during the bidding round, while TotalEnergies managed to obtain 22.5 per cent non-operated interest in the Atapu field and 28 per cent in the Sépia field.

Datuk Tengku Muhammad Taufik, Petronas President and Group CEO, commented: “Petronas is extremely encouraged with the outcome of the bid round which marks our entry into the Santos Basin. This signals our commitment to strengthen our ventures in Brazil which offers the world’s most prolific basins. Establishing our presence in the Americas is in line with our global growth strategy.”

TotalEnergies reported on Friday that the company and its co-venturers were successful in winning the Production Sharing Contracts (PSC) of the Atapu and Sépia pre-salt oil fields, offered by Brazil’s National Agency of Petroleum, Natural Gas and Biofuels (ANP) in the Transfer of Rights (ToR) Surplus Bidding Round.

Patrick Pouyanné, Chairman and CEO of TotalEnergies, remarked: “With the successful bids on Atapu and Sépia, TotalEnergies further expands its footprint and production in the pre-salt Santos Basin, a key growth area for the company. These are unique opportunities to access giant low-cost and low emissions oil reserves, in line with TotalEnergies’ new strategy.”

Based on TotalEnergies’ statement, the production from both fields will contribute to increase the firm’s production in Brazil from the effective date of the PSC planned by end of April 2022, with 30,000 boe/d in 2022 growing to 50,000 boe/d from 2023.

“Growing our presence in Brazil will enable us to accelerate the restructuring of our oil portfolio towards low-cost and low emissions hydrocarbon resources that will contribute to transform TotalEnergies to a sustainable multi-energy company,” added Pouyanné.

Source: TotalEnergies

“These assets benefit from world-leading well productivities to keep costs well below 20 $/boe. They also leverage technological innovations to limit greenhouse gas emissions to well below 20 kg/boe,” concluded Pouyanné.

To remind, Petrobras, as the operator of the fields, agreed on the rules for the Sepia and Atapu fields sale in April 2021 and approved an agreement with the government regarding compensation that must be paid to the company in the event of an auction of reserves.

Later that month, Petrobras announced its intention to exercise its rights of first refusal and bid for these deepwater oil fields, adding it would be aiming to take a 30 per cent stake in each field.

Petrobras informed on Friday that the company exercised the preemptive right in the acquisition of excess volumes from the Sépia and Atapu fields, adhering to the winning consortium’s proposal. 

Petrobras compensation
Source: Petrobras

For Atapu and Sépia, the compensation amount is over $3.2 billion respectively and will be paid by partner companies to Petrobras in proportion to their participation in the consortia. For Atapu, Petrobras will receive compensation by 15 April 2022. The date of compensation for Sepia will be defined after negotiations with the consortium.

Located in water depths of about 2,000 metres, Atapu is a pre-salt oil field in the Santos Basin. The production, which started in 2020, has reached a plateau of 160,000 barrels per day with a first Floating, Production, Storage and Offloading (FPSO) P-70, built by CNOOC.

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Furthermore, a second FPSO is planned to be sanctioned, which would increase the overall oil production of the field to around 350,000 b/d.

After the successful bidding round, the partners in the Atapu Production Sharing Contract are TotalEnergies (22.5 per cent), Petrobras (operator, 52.5 per cent), and Shell (25 per cent).

P70 FPSO CNOOC
P-70 FPSO; Source: CNOOC

Sépia is also located in the Santos Basin, in water depths of about 2,000 meters and the production, which started in 2021, is targeting a plateau of 180,000 barrels per day with the first FPSO.  A second one is planned to be sanctioned to increase the overall oil production of the field to around 350,000 b/d.

Following the latest auction, TotalEnergies (28 per cent), Petrobras (operator, 30 per cent), QatarEnergy (21 per cent) and Petronas (through its subsidiary – Petronas Petroleo Brasil – 21 per cent) are partners in the Sépia Production Sharing Contract.

It is worth noting that this is not the first time the Brazilian government attempted to auction off reserves in the Atapu and Sepia offshore oil blocks. The first sale attempt was made in early November 2019.

At the time, oil companies were bidding for ownership in the Buzios, Sepia, Atapu, and Itapu oil fields. However, what was described as a ‘mega-bidding round’ ended in disaster as only Petrobras and two Chinese companies submitted their bids, while Atapu and Sepia oil fields received no bids.